Effective September 27th 2010, the Small Business Jobs and Credit Act of 2010 had a beneficial impact on Section 179 of the IRS Tax Code. The biggest impact is that it increased Section 179’s tax deduction limits – meaning that companies can now claim a larger amount in tax deductions for purchased equipment, in the same fiscal year that they buy the products.
Section 179 is part of the IRS Tax Code that allows small businesses to deduct the price of financed or leased equipment. Instead of writing of small deductions on a tax report for a set period of time, Section 179 allows companies to write a lump sum deduction for the fiscal tax year in which they purchase the machinary. This is an incentive for businesses to invest in themselves. To qualify for this deduction for the 2010 fiscal tax year, you have to put the equipment into service by midnight of December 31st.
Below is an example of how Section 179 works for the years 2010 and 2011.
Utilizing Section 179 can add a substancial boost to your bottom line, however to qualify you must put equipment into service this year. Also, the effects of the Small Business Jobs and Credit Act will only continue through 2011. Microgrid Energy can help clients receive this deduction; contact us to find out how.